Seven West Media has been dealt a blow in its bid to offload Pacific Magazines to rival Bauer Media for $40 million, after competition fears were raised the same day a takeover of Prime Media was scuppered.

The ACCC on Thursday flagged preliminary concerns over the proposed deal between Australia’s two biggest magazine publishers, which would result in German-based Bauer adding Pacific’s New Idea, Who, Marie Claire and That’s Life to a stable that already includes Woman’s Day, Woman’s Weekly, NW, Harper’s Bazaar and Take 5.

The regulator’s statement came a hour or so before Prime Media’s major shareholders defeated a $64 million takeover bid by Seven.

In response to Thursday’s Bauer competition fears, Seven West claimed the ACCC had not properly considered the impact of social media and digital giants on the magazine industry, but the watchdog says competition still has a role to play even in a declining market.

“Pacific Magazines and Bauer are the only magazine publishers in certain categories, and their titles appear to compete head-to-head on content and cover price,” ACCC chair Rod Sims said in a release.

“If Bauer bought Pacific Magazines, Bauer would remove its closest competitor in certain segments. Our preliminary view is that this would allow Bauer to reduce the effort put into content production and the range of content, or to increase prices.”

The Pacific-Bauer deal – which includes a cash consideration of $40 million and $6.6 million worth of advertising for Seven West with Bauer – was first announced in October, with both companies hoping to finish the transaction by the end of the year.

Seven West on Thursday said the ACCC had taken “an overly narrow view” of the competitive dynamics and constraints at play for magazine publishers, and said the competitive constraints from digital and social media platforms had not been properly considered.

“Advertising spend on consumer magazines represents only two per cent of total advertising spend in Australia, whereas internet advertising spend accounts for more than 46 per cent of total advertising spend in Australia,” Seven West chief executive James Warburton said.

“At a time when the ACCC itself is looking at the impact of digital platforms on traditional media businesses and in the face of proposed government reforms to redress the imbalance between traditional media businesses and the dominant digital platforms, the concerns that have been expressed seem misplaced.”

Submissions on the proposed buyout will be accepted up until February 14, with the ACCC making a final decision on April 2.

Meanwhile, Seven’s proposed takeover of Prime was defeated on Thursday by a 53.5 per cent shareholder vote.

The result came down – as expected – to opposition from major Prime shareholders Australian Community Media chairman Antony Catalano and WIN TV owner Bruce Gordon.

The ACCC had given the takeover the green light earlier this week.

Prime chairman John Hartigan retired following the scheme meeting but told media the company would continue to push ahead for a deal with Seven.

The network also announced after the meeting it had acquired 54.6 million shares in Prime from Spheria Asset Management – a 14.9 per cent stake – which means means the broadcaster is now Prime’s biggest shareholder.

“While we’re disappointed with the outcome of today’s vote, we remain committed to Prime,” Seven West boss Mr Warburton said.

“As Prime itself has said, the business is under pressure to meet regional Australia’s needs and today’s outcome is an unfortunate result for them and their shareholders.”

Shares in Seven West were flat a 33.5 cents at 1503 AEDT, while Prime Media dropped 5.41 per cent to 17.5 cents against a 0.16 per cent drop for the benchmark ASX/200.